The first major mistake dumb money traders make is where they look to enter and exit their position, the figure is key. Now you might already be scratching your head? What the fuck is a figure? A figure is a whole number like $100, $50, $44, $23, you get the picture, a whole number. Trust me on my first trading desk (The Mook Desk), it took me 2 weeks to figure out that out as I was too embarrassed to ask.
“Dumb money buys and sells whole figures.”
In virtually every trade we put on, we buy above figures, and get out below figures. Meaning if we want to buy BLK on a break of $400, we would much rather buy $400.01 than be cheap trying to buy $399.99. You might be thinking, really? 2 goddamn pennies makes that big a difference? You bet your ass it does and we have avoided tens of thousands of trades because of that. Conversely, those mere pennies have gotten us into and kept us in thousands of trades too. Let's take a look below:
“Rookies plan for sunshine, we prepare for hurricanes.”
BLK was setting up for this $400 break for quite some time, had you been a dumb money buyer trying to buy whole numbers, 3 times in a row you would have bought $400 only for it to drop $10-$20 points in your face. We simply bought $400.01 when it broke, since that break BLK went on a 50% run. As a stock that was AT ALL TIME HIGHS and also a VERY EXPENSIVE $400 stock, most rookies would say it could not go higher, but it went 50% higher in less than 8 months! Now we bought $400.01 however we only caught $30 points of the $200 point move, what a dumbass (in hindsight!)
When trading you would have to be an idiot to buy a name with the expectation of losing money. You invest in a stock because you feel it is undervalued and due to appreciate as soon as you buy it, however more often than not, you are wrong (so are we). Don't take it personal, we’re wrong all the goddamn time, we are professionally and statistically wrong, yet we make money.
There are only a few walks of life where people are paid insane amounts of money to be wrong more than they are right, trading happens to be one of them. However you will see that the guys who have been in the game long enough are not making bold ‘shouting from the mountain’ bets. The big players move in silence, you only hear them talk about a trade after they are out and the dumb money is pilling in.
Trading is not: A leads to B to C to D to E and you win. Trading is more like: F to A to G to Q to Q to Q to B to Z then back to A. This is why the first way we gauge someone's experience is asking them “what's your out?”
If the answer is a higher price (meaning their only plan is to profit) they’re dumb money, plain and simple. If their answer is below the current price, we know they have experience.
“Past failures tend to furnish the finest material to learn from.”
As time goes on you learn more from your mistakes than from your successes. Your successes keep you motivated to continue and your mistakes help you to continue to learn. Trust me mistakes are part of trading regardless of experience or bank roll. Don't get overconfident after a few winners as anyone can win once or want to throw in the towel after a string of losses. Just when it's the darkest tends to be right before the turn and vice versa. If you’re more like 0/100 on your trades, then you’re just ass, and should seriously consider doing something else. Just when you feel that the sun is shining the brightest and you can't do any wrong, those sneaky expensive lessons tend to pop up to keep that ego in check. Any real trader will openly talk about trades they fucked up, it's the rookies who only want to talk about their best trades.
Do you have balls?
In the Group Chat explain why you should look to buy stocks above figures and get out of stocks when they break below figures. If you really have balls explain a time when you made a dumb money mistake and what you learned from it. Trust me, ask our mentors that question and they will have dozens of trades to show and will explain their fuck ups!